1

Istanbul, Turkey, April 26, 2012Istanbul, Turkey, April 26, 201235th ADFIAP Annual Meetings

Tiago Soeiro

Development Financing in an uncertain world: Development Financing in an uncertain world: the BNDES experiencethe BNDES experience

2

BNDES Highlights

Founded on June 20, 1952

100% State-owned company under private law

Key instrument for implementing the federal government’s industrial and infrastructure policies

Main provider of long-term financing in Brazil

Emphasis on financing investment projects

Support for micro, small and medium-sized companies

Brazilian Export Bank

Brazilian Development Bank

3

Infrastructure

Heavy Industry – Consumer Goods

Small and Medium-Sized Enterprises

50s 60s 70s 80s 90s 00s Today

Technologic Development

Time Line

Imports Substitution

Energy

Agribusiness

Exports

Privatization Program

Urban and Social Development

Social Inclusion

Innovation

Sustainability

Small Business

4

The strategic role of development financing

Long-term financing is aimed atLong-term financing is aimed at• More and better work opportunities

• More and better infrastructure

• More and better competitive capabilitiesMore and better competitive capabilities

As markets are pro-cyclicalAs markets are pro-cyclical• A development bank is an instrument of systemic stabilityA development bank is an instrument of systemic stability• But… Attention!! But… Attention!! Scale and scope mattersScale and scope matters… Banks must … Banks must

have adequate have adequate resourcesresources and and instrumentsinstruments

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Disbursements

Converted to US dollar on disbursement dates

The crisis has changed the size of the BNDES

Source: BNDES

34

82.3

96.3

71.6

49.8

24.119.813.8

11.7

0

20

40

60

80

100

2003 2004 2005 2006 2007 2008 2009 2010 2011

US$ billion

Long TermLong Term

Long Term + Countercyclical Long Term + Countercyclical

6Source: Brazilian Central Bank

46,5

23,6326,45

44,58

20,5

23,4

20,8

17,219,2

20

25

30

35

40

45

50

Tota

l Cre

dit/G

DP

(%)

15

16

17

18

19

20

21

22

23

24

25

BN

DE

S C

redi

t/Tot

al C

redi

t (%

)

Total Credit/GDP(%)" BNDES Credit/Total Credit(%)"

Credit to GDP and BNDES share

The crisis

BNDES’ Counter-cyclical roleBNDES’ Counter-cyclical role

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BNDES Non-Performing Loans

Brazilian Financial SystemAverage NPL - Default RateSource: BACEN (Mar. ’12)

3.6%

0.50%

3.10%

0.60%

2.10%

0.68%

0.11% 0.15% 0.20% 0.15% 0.14%

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

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Instruments

Direct operations

Indirect operations

Financing & guarantee for SMEs

Export finance

Project finance

Equity investments

Grants

Development banks: scale and scope matters

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Indirect Operations

AccreditedFinancial Institution

ENTERPRISE

Indirect OperationsCompanies financed through an accredited

financial institution

Information & Relationship

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Indirect OperationsDisbursements and Number of Operations

Indirect Operations

50.253.3

30.6

26.219.813.410.47.66.15.15.76.54.96.85.64.54.8

51 29 55 4359

103 143 124102

135 117121

205

202

389

607 894

0

10

20

30

40

50

60

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

Dis

bu

rsem

en

ts -

US

$ b

illion

0

100

200

300

400

500

600

700

800

900

1.000

N°

of

op

era

tion

s in

th

ou

san

ds

Disbursements N° of operations

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During the crisis: pro-active policies sharply decrease the cost of capital

93.9

105.0

99.3

110.2

100.5105.3

79.1

105.4

84.2

99.2

70

75

80

85

90

95

100

105

110

115

3T 2008 4T 2008 1T 2009 2T 2009 3T 2009 4T 2009 1T 2010 2T 2010 3T 2010

PIB pmConsumo das FamíliasConsumo do GovernoFBKFExportações

Source: BNDES

Growth Rates (3Q2008= 100)Growth Rates (3Q2008= 100)

GDPHousehold consumption

Government

Investment

Exports

GDPHousehold consumption

Government

Investment

Exports

PSI

Investment Support Program in which interest rates are reduced

PSI

Investment Support Program in which interest rates are reduced

Pedidos de Liberação da FINAME(média acumulada em 22 dias em R$ Milhões até 06/12/2010)

set/08153.0

jul/0960.5

0

50

100

150

200

250

300

dez-

07ja

n-08

fev-

08m

ar-0

8ab

r-08

mai

-08

jun-

08ju

l-08

ago-

08se

t-08

out-

08no

v-08

dez-

08ja

n-09

fev-

09m

ar-0

9ab

r-09

mai

-09

jun-

09ju

l-09

ago-

09se

t-09

out-

09no

v-09

dez-

09ja

n-10

fev-

10m

ar-1

0ab

r-10

mai

-10

jun-

10ju

l-10

ago-

10se

t-10

out-

10no

v-10

Média abr-nov/10214.5

Início do PSIPSI launchedPSI launched

BNDES’ monthly disbursements to BNDES’ monthly disbursements to acquire capital goods (R$ million)acquire capital goods (R$ million)

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Statements and beliefsStatements and beliefs

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Development, financing and the StateDevelopment, financing and the State

• Contemporary State: focus on building up competences => more and better jobs.

• Developing financing for the long term demands => more State and more Market.

• Public banks are essential for systemic stability and the permanent availability of investment financing.

• To be effective, a Development Bank must have the necessary means: resources and instruments.

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Istanbul, Turkey, April 26, 2012Istanbul, Turkey, April 26, 201235th ADFIAP Annual Meetings

Development Financing in an uncertain world: Development Financing in an uncertain world: the BNDES experiencethe BNDES experience

www.bndes.gov.br/english/